The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1887-11-24
MATTERS AT TIE CAPITAL
Facts About the National Banks and
the Security They Offer DepOsitors.
Not Meeting with the Prompt Responses
He Washington Notes.
ABOUT NATIONAL BANKS.

Information Concerning the Character of
Security They Offer Depositors.
Special to the Indianapolis journal.
WASHINGTON, Nov. 23.-"Here is a remark
able inquiry" said official in the Office of the
Comptroller OF the Currency, this morning, hold
ing up letter and re reading it "A man out in
Ohio writes to know if it is true that National
Bank secures it depositors By depositng bonds
with the United States Treasurer" There was
a hearty laugh among the employees in the of
fee, when the official continued: But wait;
the best is to come The man says in his letter
that the reason he asks the question is that a
couple Of National banks in his city. each having
the same capital stock. advertising for trade.
and that one, because it has more bonds than
the other deposited with the Treasurer, offers
better security to depostors
The laughter grew more hearty, when
the official turned to me and said:
81 had no idea that there was national bank
err in this whole country who was transparent
enough to try to deceive any one with such stuff
that. Everybody ought 20 know that the
bonds deposited here have nothing whatever to
do with making secure depositors in national
banks, and that if national banks could be or
eaaized without making the deposits they would
not be made. When bank is organized there
must be minimum of twenty-five per cent. Of
the capital stock deposited with the United
States Treasurer to secure circulation. That is,
the government authorized the bank to issue
that amount of circulation-or rather. ninety per
cent of the amount of bonds deposited. The
deposit of bonds with tho Treasury Department
is TO guarantee the redemption of the money the
bank issues, and has nothing whatever to do
with securing depositors in the bank. OF course,
q national bank is better security to
those who deposit money in them
than are private banks. for tine reason that the
government exercises supervision over ma
tional banks; it requires them to keep certain
amount of its deposits and capital on hand: TO
make loans and do business generally upon
certain basis which is deemed most secure; but
it does not do this because the bank has depos-
tied bonds with the Treasurer to secure circula-
ton; that deposit was for matter already set
ted the government requires it security to
it for the redemption of the money the bank
issued, and not as security to those who do bus
mess with the bank. A bank that has the min
secure circulation-$12 5O0-offers the same
curity to its depositors that bank does that
has deposited $4,000. 900. 1t offers the
government supervision. The government looks
after all national banks alike. Nearly all the
banks have reduced their deposits
with the Treasurer. and consequent
1y their circulation, to the min
imum. This reduction does not affect the
capital OF tho banks. A few of the banks have
not done this, because they not N position
to do So to reduce tho circulation might at
tract attention and make comment by those
who do not understand the principle of govern
ment control of banks. You readily
that the circulation of national banks is losing
matter. and that few would have any circula-
tion if they could comply with the REQ uirements
without it. The lowest-priced bonds the
four and a halls, due in 1891. They cost pre-
MUM of cents. and as but 80 per cent. of the
amount of bonds deposited returned in
rency and the premium on the bonds amount to
per cent year. you can readily compute the
loss the banks. The next best bond to buy
for bank deposit Is the per cents This bond
is due in 1907, and is worth premium Of soysr
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